Florida’s real estate market has been experiencing significant growth, driven by an influx of new residents and favorable economic conditions. Once known for its affordable living, the Sunshine State is seeing substantial increases in property values, especially in popular cities.
Rising Home Values
According to Zillow, the average home value in Florida has surged from $249,725 in January 2020 to $399,944 as of mid-2024. Desiree Avila, a board-certified realtor with Charles Rutenberg Realty in South Florida, attributes this rise to both domestic and international migration, alongside historically low interest rates during the COVID-19 pandemic.
Factors Driving Up Prices
Avila explains, “These migrations have maintained a strong demand in South Florida real estate. Cities like Miami and Fort Lauderdale have become less affordable due to this influx.” She also notes that interest rates of 2%-3% during the pandemic spurred buying, pushing prices even higher.
Despite recent hikes in interest rates by the Federal Reserve, Avila doesn’t expect a return to pre-pandemic home values. She points out that many buyers are now forced to lower their budgets. “The buyer who could afford $650K during COVID may now only afford about $400K,” she said, emphasizing that today’s $400K house is not equivalent to a $400K house in 2019.
Cities Becoming Unaffordable
If you’re considering buying a home in Florida, you might want to avoid these increasingly expensive cities:
Miami
– Average home value: $579,125
– Insights: Miami’s status as a cultural and financial hub has led to significant price increases. Avila remarks on its appeal to both domestic and international investors, particularly from Latin America, making affordable housing scarce.
Orlando
– Average home value: $388,798
– Insights: Driven by a booming tourism industry and a growing job market, Orlando has seen a surge in housing demand. However, high property taxes, seasonal traffic, and hurricane threats are challenges for residents.
Tampa
– Average home value: $386,957
– Insights: Tampa’s economy, especially in tech and healthcare, attracts many new residents, raising home prices. Waterfront properties are in high demand, contributing to the overall cost increases.
Fort Lauderdale
– Average home value: $530,356
– Insights: Known for its coastal appeal and vibrant nightlife, Fort Lauderdale has seen a significant rise in home prices. Avila notes that many Miami residents move here seeking more affordable options, but the market is becoming competitive.
Naples
– Average home value: $602,301
– Insights: Naples attracts affluent buyers with its upscale living and beautiful beaches. The limited housing supply and high demand have made it one of the most expensive cities in Florida.
Considerations for Buyers
With the rising cost of living and property values in these cities, potential buyers should weigh their options carefully. Factors such as high property taxes, insurance rates, and the risk of hurricane damage are crucial to consider.
The Florida real estate market continues to evolve, and while prices may not return to pre-pandemic levels, understanding these trends can help buyers make informed decisions.
